What classifies as a luxury car?
A luxury car is a high-end vehicle defined by premium materials, advanced technology, superior comfort, and brand prestige, typically priced above mainstream models and backed by enhanced service and exclusivity.
Defining characteristics
Luxury is defined not by a single metric but by a blend of price, materials, comfort, performance, technology, and the ownership experience. There is no official global statute that designates a car as "luxury"; automakers, journalists, and buyers rely on a mix of indicators to compare models within the premium segment.
Core criteria
These attributes commonly distinguish luxury cars from mainstream counterparts and help buyers assess where a model fits on the prestige scale.
- Price and market positioning above mainstream mass-market models
- Premium materials and craftsmanship (soft leather, real wood or metal trim, refined switchgear)
- Quiet, refined ride quality with advanced sound insulation
- Advanced technology, safety features, and driver-assistance systems
- Enhanced performance and responsive handling, often with smooth, powerful powertrains
- Strong brand heritage, dealer network, and ownership services
- Extensive options and customization, often with bespoke interior finishes
- Generous warranty, service packages, and long-term support
- Resale value and status perception within certain markets
Collectively, these factors contribute to a perception of luxury that goes beyond raw price, blending tangible hardware with intangible signals of status and refinement.
Market segments and representative models
Luxury cars cover a spectrum from entry-level premium to ultra-luxury flagship sedans and SUVs. The line between mainstream premium and true luxury has shifted as brands broaden equipment, electrification, and personalization options.
Below are common market segments within the luxury car category, with representative models that illustrate each tier.
- Entry-level luxury / premium compact: BMW 3 Series, Mercedes-Benz C-Class, Audi A4, Lexus IS, Acura TLX, Genesis G70
- Mid-size luxury / executive: BMW 5 Series, Mercedes-Benz E-Class, Audi A6, Lexus ES, Genesis G80
- Full-size luxury: Mercedes-Benz S-Class, BMW 7 Series, Audi A8, Lexus LS, Genesis G90
- Ultra-luxury / flagship: Rolls-Royce Phantom, Bentley Flying Spur, Mercedes-Maybach S-Class
- Sport-luxury / performance-centric: Porsche Panamera, Maserati Quattroporte, BMW M5, Mercedes-AMG S-Class variants
- Electric luxury: Tesla Model S, Lucid Air, Porsche Taycan, Mercedes-Benz EQS, Audi e-tron GT
These examples show how brands place models across a spectrum from accessible privilege to exclusive, handcrafted experiences, and how electrification is increasingly intertwined with luxury branding.
Ownership experience and branding
Beyond the badge and the sheet metal, luxury is often defined by the ownership experience: dealer services, maintenance plans, concierge options, and the overall consumer perception of quality control and aftercare. Software updates, over-the-air improvements, and personalized customization are increasingly part of luxury branding as well.
Summary
In essence, a luxury car is characterized by premium materials, advanced technology, refined comfort, powerful performance, and a strong brand and service proposition. The exact line between premium and luxury shifts with market trends, but the core idea remains: a higher level of refinement, exclusivity, and ownership experience than mainstream models.
What does the IRS consider a luxury car?
It's important to note that the designation "luxury vehicle" is used somewhat loosely by the IRS and is deemed to be a vehicle with four wheels used mainly on public motorways that must have an unloaded gross weight of 6,000 pounds or less. 4 It is not in reference to a specific brand of car.
How much should I spend on a car if I make $60,000?
How Much Should I Spend on a Car if I Make $100,000?
| Annual Salary | Affordable Monthly Payment (based on 15% of average take-home income) | Vehicle Price (assuming 20% down and 60-month loan term) |
|---|---|---|
| $60,000 | $598.05 | $39,591 |
| $65,000 | $639.75 | $42,300 |
| $70,000 | $681.60 | $45,118 |
| $75,000 | $723.30 | $48,000 |
What is an entry level luxury car?
Sedans. The entry point of the luxury-vehicle range resides with models such as the Acura Integra, Audi A3, BMW 2 Series, and Mercedes-Benz CLA. These cars bridge the gap between mainstream cars and true luxury vehicles.
What price point is considered a luxury car?
A price of over $35,000 is generally considered the starting point for a luxury car, with entry-level models falling in the $40,000 to $60,000 range. Mid-range luxury vehicles are typically between $60,000 and $100,000, while high-end luxury and exotic cars cost $100,000 and up. The exact price can vary based on the brand, features, and market positioning, but the key is a higher price point compared to standard vehicles due to superior materials, technology, and performance.
Price ranges for luxury cars
- Entry-level luxury: Starts around $35,000 to $40,000 and can go up to $60,000, offering a first taste of luxury features and performance.
- Mid-range luxury: Typically costs between $60,000 and $100,000 and includes more advanced features, better performance, and enhanced comfort.
- High-end/Ultra-luxury: Begins at $100,000 and above, encompassing the most exclusive and high-performing vehicles.
Factors that influence the price
- Brand perception: The reputation of the manufacturer plays a significant role in a car's price.
- Features: Luxury cars come with high-end technology, sound systems, and safety features that add to the cost.
- Materials: The use of premium materials in the interior and for body parts justifies a higher price.
- Performance: More powerful engines and advanced transmissions are often found in luxury vehicles.
- Sound insulation: Superior sound insulation for a quieter cabin is a common characteristic of luxury cars.
